EV revolution: Indian auto sector must get cracking on new value chains or face a Chinese deluge

The Auto Expo 2020 beginning this week promises a sneak peek into the future of mobility. By all accounts, the automobile industry is at an inflection point. Driven by environmental concerns, car manufacturers are increasingly turning to cleaner technologies like rechargeable batteries and hydrogen fuel cells. In fact, at the expo this year at least 10 manufacturers will unveil around 24 electric concept and production ready models – a jump from just 11 in the 2018 expo.

True, the EV revolution has been talked about for some time now. But electric cars have never been as attractive to customers as today given falling battery costs, increasing battery efficiency and vastly improved EV ranges. That said, the jury is still out on whether EVs are actually as clean as they are billed. After all, they feed on electricity coming primarily from fossil fuel driven power plants. Hydrogen fuel cell technology might be cleaner but is presently very expensive.

As things stand carmakers are more inclined to explore the EV route with dozens of models in the pipeline. A part of this is driven by the rise of China both as a consumer automobile market and production source. In 2018 Chinese EV sales topped 1.1 million cars, accounting for more than 55% of EVs across the world. China also produces more than half the world’s EV batteries. And since EVs are easier to build and new age cars rely more on IT than traditional hardware engineering, Chinese tech firms see an opportunity to score big in the EV game.

For the Indian automobile sector too this is a crucial juncture. Hitherto, Indian manufacturers had successfully slotted themselves in global automobile value chains. However, with EVs the sector needs to undergo a transformation with government providing an enabling environment. Indian auto firms could leverage the country’s IT prowess to kick start a domestic EV revolution, but government needs to facilitate the infrastructure for EVs such as adequate charging stations or workable battery swapping models, as well as R&D into cutting edge technologies. What is certain is that if the Indian auto sector doesn’t exploit this opportunity, it could face a Chinese deluge akin to the mobile phone market. India must cement its place in the global EV value chain.

This piece appeared as an editorial opinion in the print edition of The Times of India.

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